Decisions about tax cuts and public spending inevitably affect the economy.
One out of every six jobs in Iowa is a government job. (See chart.) IPP’s monthly Iowa JobWatch summaries have been showing how cuts in public-sector jobs is affecting Iowa’s overall job picture.
When you start whittling away at those jobs — as you do every time you lay off a teacher, or a custodian in a public building, or someone fixing streets or policing neighborhoods, it has an economic impact.
Suddenly, that person is having a harder time making ends meet at home, and spends less in the local grocery store, or puts off repairs or improvements to their car, home or clothes.
Baby needs new shoes? We’ll see. Car running rough? Well, let’s wait a little longer until something really goes wrong. Enough decisions like that, and the next family down the street is making the same decisions, and the next, and so on.
Debates over public spending — which often inaccurately reflect reality on budgets and taxes anyway — should not avoid the clear economic consequences of the decisions on the table.
Posted by Mike Owen, Assistant Director